Even if you may think that you can’t be taken advantage of by predatory lenders, you should still be careful and know how to spot bad lending practices. Many borrowers have lost their homes due to predatory lending, but there are signs that can help you avoid being taken advantage of by a lender when you are getting a mortgage loan.
Some signs to look for to spot predatory lenders include:
• They may estimate a home to be worth more than the market value. If you suspect that your lender is inflating the appraisal value of the home you are trying to purchase they may be trying to inflate the price to get the loan to go through.
• If a lender quotes you a specific interest rate and closing costs and then raises these costs when it is time to close the loan. This happened frequently in predatory lending practices and many people went ahead and signed high interest rate bad deals because they were fed up with the process, thought this was the best deal they could get, or were really eager to purchase the home and did not want to have to wait for a better deal and risk the purchase falling through. Don’t be afraid to walk away from the deal.
• If the lender tries to pressure you into taking a balloon mortgage, a high interest rate mortgage, or an adjustable rate mortgage because it is the best you can get based on your circumstances. Don’t be pressured into a bad deal.
• They may try to tell you that they are the only lender who will finance your loan due to income, credit, or other issues. In these cases they are trying to make you feel insecure and inadequate enough to take the deal instead of going to another lender. They are hoping that you will be embarrassed and stick with them to avoid having another lender look at your personal information.

All of these are methods that predatory lenders use to try and trick people into high interest rate loans that they can not afford. Mortgage brokers get their fees paid on a commission basis which means that the large the loan amount, the more money they make. Don’t take out a loan for more than you can afford. Don’t fall prey to predatory lenders. For more information on predatory lending go to www.fha.gov